As service providers seek the next wave of applications to entice consumers and businesses, network convergence is fast becoming a reality to enable Voice-over-Internet Protocol (VoIP) services and a new, enhanced customer experience. This is especially true in the area of billing, a frequent point of contention with subscribers. The ability to view call history and resulting call detail records (CDRs) in real time is a mainstay of VoIP and a key market differentiator over traditional phone services. In essence, VoIP customers are offered a real-time billing or convergent billing experience from day one, enabling unprecedented access to call history and even providing the ability to purchase services on a prepaid basis. As a result, subscribers benefit from better rates and enhanced features, which in turn protects revenue streams for services providers and even reduces churn rates.

One of the catalysts for this communications trend relates to the increasing number of broadband users connecting to the Internet and downloading email using cable, DSL and fixed-mobile connections. The proliferation of high-bandwidth users has given rise to an increasing desire to conduct voice calls over broadband connections. As a result, VoIP has become the latest fashionable application, and is now a top priority of service provider agendas for the next few years.

As a result, some of the large scale providers are now aggressively rolling out VoIP services to their residential and small business customers, riding both the appeal of lower telephony costs found on packet networks and advanced calling feature bundles that promise increased productivity and ease of use. The fact that industry bellwethers are embracing this innovative technology for modern telephony is a key indicator of trends to come. It is the small, innovative VoIP providers, however, who are gaining the mindshare, and some would argue customers, by offering attractive pricing and a superior customer experience. This trend is especially visible in the United States, where dozens of startups called “broadband telephony providers” have entered the market at a record pace, offering both consumers and businesses a compelling alternative to plain old telephone service (POTS).

The momentum behind the funding for these emerging providers is feeding expansion in not only the U.S. but also Canada, Mexico and the UK. These nimble companies are driving the mainstay incumbents to accelerate their VoIP rollouts. For most providers, the appeal of VoIP lies in the ability to provide competitive, flat-rate, unlimited domestic calling plans that include advanced calling features at no extra charge. These features include caller ID, voicemail, three-way conferencing and even click-to-call from buddy lists that capture presence and availability information while integrating with popular contact managers such as Microsoft Outlook. One of the most compelling features, in my opinion, is the ability for subscribers to view real-time call details using secure and personalized Web portals.

At first glance, the ability to see call details in real time seems counterintuitive. After all, providers are making a splash by offering flat-rate, unlimited calling and free in-network calling between users of their service. Why then would they want to offer access to real-time call details and billing records?

Accessing real-time call details has a number of benefits, grounded by the desire and necessity to offer a remarkable level of customer care. With wireless services, subscribers often feel that they can get stuck with large monthly bills if they go over their plan and allotted minutes. They know that overage can cost a fortune, but this usage is often impossible to track or grossly inaccurate. Making call details available in real time eliminates this concern and the main reason why broadband telephony providers have enabled this capability. To stay competitive, incumbent telephony companies are following suit with their VoIP offerings underpinned by real-time billing capabilities.

Having instantaneous access to call details and billing records provides additional benefits as well. By better understanding usage patterns, offering different payment means, managing risk and maintaining intercarrier agreements, VoIP service providers can deliver more meaningful services to their subscribers. The benefits of real-time billing can be seen in the following functions:

Usage monitoring. Not all subscribers choose unlimited plans, so service providers must also offer metered domestic calls. In addition, as service providers do not offer unlimited international calling, these calls must also be metered. Real-time billing helps both subscribers and service providers monitor call activity and usage and then apply appropriate charges.

Prepaid. Some service providers also offer greater spending control with prepaid plans. This is especially convenient when using a softphone application, which enables telephone functionality on a computer or personal digital assistant (PDA). With prepaid, real-time billing is crucial for rating calls, keeping balances updated, triggering recharge thresholds and disconnecting calls when balances are depleted.

Throttling usage. Throttling is the act of tracking usage for the purpose of limiting subscribers to a preset number of minutes or pre-set spending credit. This can help service providers control overspending and curb bad debt, especially with international calling. Throttling also allows service providers to better understand usage and potentially up-sell subscribers into higher-paying plans. Customers benefit from being able to keep up-to-the-minute views of their total bills-to-date and prepaid balances.

Curbing fraud. Fraudulent access to services is a concern and a financial burden for all service providers and is especially acute when conducting calls on the public Internet. Real-time authentication and access to subscriber data helps manage risks by keeping real-time tabs on call activity, historical call patterns, and fraudulent access to services.

Tracking intercarrier settlements. Originating and terminating calls to and from mobile and wireline networks demands the ability to track intercarrier settlements. Real-time billing can help this process and satisfy a service provider’s desire to complete settlements as quickly and efficiently as possible.

Broadband telephony providers are focused on changing the voice market. Conceptually, they treat all calls as prepaid and monitor usage in real time. VoIP is effectively accelerating the rollout of convergent billing, which is the starting point for how some of the market leaders are differentiating their subscriber’s experience. Real-time billing allows these providers to streamline their own operations and offer subscribers unprecedented access to their accounts and to real-time call details so they can better manage their usage and spending. Over time, these broadband telephony providers will build on real-time billing capabilities and enable even more value-add for their subscribers, while keeping the crucial element of trust needed to maintain and increase subscriber bases. As a result, these service providers have established a new niche in telecom and have further propelled the trend toward converged networks and convergent billing.

John Trembley serves as director of networking and telecom at TimesTen Inc., a real-time infrastructure software provider based in Mountain View, Calif. He can be contacted at trembley@timesten.com.